Gazprom: May Build LNG Plant Near Vladivostok With Japan

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MOSCOW -(Dow Jones)- Russian gas giant OAO Gazprom said Monday it has signed a deal with Japan on a possible joint construction of a liquified natural gas plant near Vladivostok in Russia's Far East.

Under the deal, the two sides will this year undertake a joint front-end engineering design on constructing an LNG plant near Vladivostok.

Japanese companies Mitsui & Co. and Mitsubishi Corp. already partner with Gazprom on Russia's only LNG plant at the Sakhalin-2 natural gas development project on Sakhalin Island.

The deal was signed by Alexei Miller, Gazprom's chief executive, and Tetsuhiro Hosono, director of Japan's agency for natural resources and energy under the Ministry of Economy, Trade and Industry.

"The parties will also study the possibility of a pilot project on natural gas compression in Vladivostok for subsequent offshore transportation and organization of gas chemicals production," the two sides said in a statement.

As Japan seeks to reduce its dependence on LNG imports from Indonesia--currently its largest supplier--government officials and company executives have intensified talks with Russian counterparts. In July, the two countries signed a preliminary agreement to build a gas export terminal near Vladivostok.

Moreover, the agreement envisages preparation of a joint feasibility study on natural gas utilization near Vladivostok as well as sales of natural gas and gas chemicals from the Vladivostok region to potential customers in Asia-Pacific market.

Russia is building a 1,300-kilometer pipeline from Sakhalin to Vladivostok, planned to be completed by the end of 2011.

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